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http://business.smh.com.au/macqu ... -20080608-2nlb.html MACQUARIE Group lost about $750 million in the market value of its big Australian listed investment funds last financial year. Since then the fall in its investments in the listed funds, which now have a market value of $2.4 billion, has continued. Macquarie is down a further $150 million on the value of its investments since its financial year ended March 31. In May Macquarie Group impressed the market with a record profit result, without making writedowns on the stakes it holds in its core business area of big listed infrastructure funds. Writedowns, which hit profits, have been commonplace among investment banks after the credit crisis downgraded the value of the mostly financial assets they held. Macquarie has largely avoided this fate through its business model of listed funds management. At its annual results it wrote down $300 million from its real estate investment trusts including Macquarie Countrywide and Macquarie Office Trust, which have fallen heavily in value as investors revalue the businesses in an environment of higher-priced debt. But a Herald analysis of Macquarie's annual result shows the two real estate businesses contributed about $200 million to the group's overall loss in market value of the major listed funds of more than $750 million during the year. The other falls in Macquarie Group's investments during the year were Macquarie Airports (down about $250 million), Macquarie Infrastructure Group (down about $100 million), Macquarie Communications Infrastructure Group (down about $150 million), the private equity group Macquarie Capital Alliance (down about $85 million) and Macquarie Media Group (down about $35 million). These falls in its infrastructure funds did not have to be written down by Macquarie Group in its annual result because the market value of its investments has been far greater than the conservative book value Macquarie Group carries the assets at. For example, Macquarie's investment in 20 per cent of Macquarie Airports has a book value of $930 million. But even after its unit price fell 19 per cent during the year Macquarie's stake in the business had a market value of $1.1 billion - well above its book value. But the buffer between the market value of Macquarie's investments and its book value is continuing to diminish, raising the prospect of large writedowns if the unit prices of infrastructure funds continue to fall. For example, Macquarie Airports has fallen a further 14 per cent since March 31, reducing the value of Macquarie's stake to $959 million - and perilously close to its book value. The chief financial officer of Macquarie Group, Greg Ward, said yesterday that a fall of the market value below book value was a trigger for discussions about whether an asset was impaired. "It (a writedown) is only when we think there might be a risk of impairment and the obvious indicator of that would be when your market price goes below your book value." Also in its annual result, Macquarie Group showed strong growth in its investment portfolio, with investments in Macquarie-managed funds growing from $2.9 billion to $3.5 billion, or 26 per cent over the year. However, this growth has only been achieved by Macquarie making huge investments into the funds it manages |
